THE WALL STREET JOURNAL
OCTOBER 20, 2009
Indonesian Appointments Taint Prospects for Economic Overhauls
By TOM WRIGHT
European Pressphoto Agency
A
deployment of armored vehicles was part of
stepped-up security measures
for Tuesday's
presidential inauguration ceremony in Jakarta.
JAKARTA -- The new cabinet of Indonesian President Susilo Bambang Yudhoyono
features choices likely to be popular with foreign investors as well as some
who analysts say lack the credentials to achieve economic overhauls.
Mr. Yudhoyono, who was re-elected in July and will be officially sworn in to a
second five-year term on Tuesday, had promised to appoint a cabinet comprised
mainly of technocrats -- instead of representatives of local political parties,
who dominated his cabinet in his first term.
Top appointees, local media reported, include politicians from the Golkar
Party, which has strong support among government employees but also has a
history of blocking efforts to streamline bureaucracy and privatize state
enterprises. Mr. Yudhoyono offered a Golkar member the industry-minister
portfolio, local media reported. A spokesman for Mr. Yudhoyono couldn't be
reached to comment.
Indonesia's resource-dependent economy is forecast to grow 4% this year due
largely to a rebound in global commodity prices. Analysts say the country needs
broad legislative and legal changes -- including steps to slash red tape,
reduce corruption and make it easier to finance big infrastructure projects --
to maintain investors' interest.
The cabinet is likely to be formally announced on Wednesday at the earliest. In
recent days, a number of candidates have said they have been asked to serve.
The market is likely to applaud the inclusion of Finance Minister Sri Mulyani
Indrawati. Ms. Indrawati said she had been asked to fulfill a cabinet-level
role that promoted economic growth through fiscal measures, a likely reference
to the finance minister portfolio. She is a former senior executive at the
International Monetary Fund.
A former head of J.P. Morgan Chase & Co.'s operations in Indonesia, Gita
Wirjawan, said Mr. Yudhoyono had asked him to head Indonesia's investment
board, which will be elevated to a cabinet-level position.
In other areas, Mr. Yudhoyono's selections drew criticism. "Yudhoyono is
attempting to balance technocrats with party representatives, and the result is
likely to be more of the same: capable economic management and missed
opportunities for institutional reform," said Kevin O'Rourke, who runs a
Jakarta-based political consultancy.
Mr. O'Rourke pointed to the apparent choice of Hatta Rajasa, a close Yudhoyono
aide, as senior economics minister as a disappointment. Mr. Rajasa, currently
state secretary and a close aide to Mr. Yudhoyono, confirmed to local media
that he had been asked to fill an economic post in the cabinet but declined to
give further details.
In 2007, as transport minister, Mr. Rajasa blamed global shipping companies for
charging too much, rather than trying to overhaul the levies that push up the
cost of doing business through Indonesian ports, Mr. O'Rourke said.
Attempts to reach Mr. Rajasa weren't successful. Darwin Zahedy Saleh, a member
of Mr. Yudhoyono's Democrat Party, the largest in parliament, confirmed he was
asked to become energy minister but declined to comment further until it was
made official.
Oil output has been falling in recent years because of unclear regulations and
reports of corruption that have deterred foreign majors from spending on
exploration. Indonesia this year pulled out of the Organization of Petroleum
Exporting Countries.
Mr. Saleh, a former economics professor at the University of Indonesia, is an
unknown quantity and may find it hard to tackle endemic corruption in the oil
sector given his limited experience in government, analysts said.
Write to Tom Wright at [email protected]
Printed in The Wall Street Journal, page A11
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